Philips in $60M Digital Watermarking Deal

Philips Electronics (NYSE: PHG) announced Monday that it has invested in Digimarc (Nasdaq: DMRC), a digital watermark developer, in a bid to meet the growing demand for the emerging technology. Digital watermarking allows an undetectable digital code to be permanently embedded within multimedia content such as music and videos as well as printed material. The codes carry information pertaining to copyright protection and data authentication.

The $60 million (US$) deal is a joint investment between the electronics giant and copyright-protection software maker Macrovision. Under the agreement, Philips will own 12 percent of Digimarc and hold a seat on the company’s board. Macrovision increases its stake in Digimarc from seven to 12.5 percent.

“Strategic investments from major industry leaders Philips and Macrovision reflect their recognition of the significance of Digimarc’s technology to the video and audio marketplace,” said Digimarc president and chief executive officer Bruce Davis.

E-Commerce Bent

Philips and the Tualatin, Oregon-based Digimarc also said they will form a new company to further develop and market additional audio and video applications for digital watermarking.

The companies said the planned initiative will focus on e-commerce opportunities, copyright violation monitoring, authentication and digital rights management.

The new company, which has yet to be named, will be based in the United States.

Deterrent to Illegal Copying

Many observers believe that the role of digital watermarking in intellectual property and electronic rights management will be a critical one.

The explosion of multimedia storage and transmission on the Web has made the reproduction of digital data increasingly easy. Companies that are developing digital watermarks say that the technology will enable users to ensure a secure business environment for copyright holders over the Internet.

Watermarks can prevent illegally-used movies and other video material from being played back, viewed or copied onto a digital recording device. A special program is needed to order to view the watermark or extract its data, making its removal virtually impossible.

Attempts to remove the watermark from an image, developers say, will result in a noticeable degradation in image quality well before the watermark is lost, thereby rendering the image useless.

Because the watermark allows unique identification of copyright owners, buyers and distributors, it is predicted that the technology will prove to be a strong deterrent to illegal copying and counterfeiting.